 Okay, shall we take our seats and begin our last, but certainly not least, Pam, I'm really looking forward to this discussion. Brazil has been in the news so much lately, corruption scandals, legal public payment scandals, calls for impeachments, there's certainly a lot going on there, certainly a lot of illicit financial flows we've seen in our reports somewhere around the area of a billion dollars a year over the last 50 years or so, something like that. So certainly significant challenges facing the current government. We have an excellent panel today to talk about this. Dr. Rogerio, a student artist with us, Dr. Leona Obrilomeque, who we've spoken of the last day and a half, and our moderator is Adriana de Keros. Okay, well, we have the last panel and we have a challenge here, so many people still waiting for the pope to arrive. So I'm first introduced myself, I think a few of you know myself throughout the day and yesterday. So I am from Brazil. I work for a U2 trade company that's a consultant firm specialized on international trade and business strategy. Yeah, a little bit about myself and how I got here, you know, I'm moderated this panel. A long, long time ago I came to U.S. and for a couple of visits and I chose some institutions with some support from the Department of State and one of them was an institution that was in the back of the creation of GFI. And I first met Tom a long, long time ago that introduced me to this project and I was very, very happy and willing to have a study on Brazil and it finally happened last year. So my background is I'm an economist. I did some research on education, on income distribution, poverty reduction, and then I started working with international trade and came up to work with Tink Tank Brazil where I had the opportunity to mix things, international trade, development, and all the social issues that I started working and doing some research. And I was very glad that illicit flows and development is totally connected. For me, with this international background was a very good opportunity to be here. So the topic we are talking today trying to understand the illicit flows from Brazil. We have here two excellent speakers that they used to be in fact my professors in Brazil a long, long time ago so I'm quite happy to be here with them today. And we're going to talk about not only the study that GFI did but also their perceptions on these issues in Brazil and exactly if it's a real big issue or not. The study showed us that 68% of capital flights in Brazil are in fact illicit flows. It's a big amount and it represents about one and a half percent of our GDP. And in the last 53 years, it amounted for $500 billion. So if we compare nowadays to the Brazilian scandal on Petrobras, it's more than $30 million so equivalent for more or less two years of illicit flows. And most of these illicit flows that the study has shown as we've seen in the other countries is related to missing vicing. So we have a lot of multinational companies in Brazil that probably respond for most of this missing vicing. I know that most of the countries are aware of that in Brazil, including it, but we don't know exactly if the Brazilian government has a huge concern on that so far. So the GFI study came up with some suggestions on how to deal with this issue in Brazil. And I think it's in accordance with the OECD that came up back to 2003 that started having some recommendations on those issues. We're talking about increasing the transparency, also increasing the government cooperation, inhibiting the missing vicing practice, and also to have some tax information exchange agreements with other countries that we already have, in particular the U.S., will be implemented, I think, totally in two years. Well, but to have all these targets reached, we have a step that's the most difficult one. It's to have the political will to reach all these targets. And I guess our speakers will cover what we have in the political side in Brazil if we have the capacity to do it or not. And let me introduce both of them. We have here Jorge, a student that is an economist, used to be the Brazilian representative at the International Development Bank for a long time, and now is based in Brazil working for the Brookings Institutions and other institutions here in the U.S. You have Leonardo Bulamac that has already been mentioned here yesterday, and I'm not sure if this morning, but with the recognition of having made the great support to the GFI from the beginning, and giving us the opportunity to have this discussion in other countries as well. So it was a huge funding from the four foundations that, in fact, permitted us to be here today. So I'll invite first, Leonardo, to give us some 10 minutes. Okay. All right. And then I will. Okay. Thank you, Adriana. Okay. Good morning. Thanks. Thank you, Raymond. Thank you, Tom. Great conference, and thanks for the compliments I got yesterday. I think you deserve more than you got the whole thing running. Okay. So let me not get into the specifics of the Brazilian case because the expert here is my colleague, Rogério Studer, and he will probably tell you more about Brazil than what I could do. So what I'll try to do is to try to make the case for broadening the focus of global financial integrity on the subject of illicit capital flows in the future. And why do I say that? Well, because in my, from my perspective, I would put together both illicit and illicit capital flows, and I would tie them to global financial governance, which obviously was the initiative that I was running at the Ford Foundation. So my perspective is this one, it comes from sort of a global financial governance perspective. And from that perspective, I would say this, the subject of free capital flows, illicit and illicit. It's a very difficult case for both domestic and international cooperation. And in one sense, let me just remind us of a few things that everybody knows. But the growth of illicit capital flows in not only in Brazil as the study is the great study that you just produced shows. The growth of illicit capital flows in the last three decades, at least all over, is one of the most telling manifestations of this truck, what I call a structural change that globalized capitalism went through. And by this, let me try to be specific, I'm speaking about the financialization plus private interests driven re-regulation, which is known as deregulation. No, there is no deregulation, always re-regulation. And what kind of re-regulation took place three or four decades ago? It was one that produced the industrialization of finance along with the financialization of industry. So this combination is an explosive one. And by private interests driven re-regulation, I mean giving private corporations financial or not much more room to write the rules that will be applied to them. So in the growth of capital flows, again, illicit and illicit, I think illustrates the point because it falls in a complex intercession among domestic and international supervision and regulation, tax authorities, financial regulators and supervisors, and tax shelters. Here, I want to throw two facts that also come from the report. One refers to Brazil and the other one, China. Brazil, I think, has a very competent tax authority. It's good. And it has a good bureaucracy there, sort of a Weberian bureaucracy there. So it's not the case that we lack the resources, something that came up several times here in the discussions. We do have the resources and we also do a very decent financial regulation, especially if we compare with what's around, including the U.S., before the crisis and I have no idea of what's going to come after Dodd-Frank, but we have very good financial regulation in comparative terms. However, we can see from the report that we had capital flight was huge during the crisis, but also during the crisis, we grew. We ignored the crisis. We grew and we had poverty alleviation during the crisis as well. So we had those things going together, which also applies to China. China is the first in terms of illicit capital flows, but it's also the first in development, the first in poverty alleviation. So those things correlate in a sort of a tricky way. What I think is the missing link here. So in a way, illicit and illicit capital flows both, I think they pose several problems that were brought already here. I'm just going to remind us of that. A fiscal problem, of course, less fiscal revenues. A financial problem, much more volatility, much more instability. A moral problem because the kind of example that it sets, the kind of behavior that it incentivizes. And of course, a global, both a global and a domestic governance problem, which in the end, I think we should refer to what Adriana just mentioned, it ends up as a political and a legal problem, if you will. So what's the missing link here in my view? The missing link is financial liberalization, which comes tied with lax tax regimes. If we have this, then it becomes extremely difficult to, one, to really know the numbers on what is really illicit and illicit capital flows. This also shows that, why? Because if we go to the trade-based, it's trade and financial. But the financial system is missing here. The banking system is the one that, okay, we just heard from our colleague here. We go to the financial authority, to the financial system. We rely in the information that they gave us about a lot of the transactions. Problems that the financial system itself, the banking system, is sort of helping the illicit capital flows to increase. They're not doing their due diligence. So the banking system, in that sense, it's more part of the problem than part of the solution. So if we jump from the trade-based data to the financial, financially-based data, it becomes much more complicated, because we have derivatives. We have exchange rate volatility. We have interest rate volatility. End of story, the banking system can produce whatever numbers they will. And it's going to be very difficult to try to really fact-check the numbers that they produce. And they are the really global corporations. They're the criminals, the criminal networks, and the banking system. And the problem is that we have a globalized financial system, but we don't have a global governance that is capable to deal with the same system that's there. And it's doing all this. So in a way, just to finish those remarks and get the ball running for Rogério to speak more specifically about Brazil, I think that what we have right now, it's sort of a posity type of capitalism, especially for the financial system. And if we have that, it's going to be really hard to deal with, again, both listed and illicit capital flows. And in that tone, let me just finish partly as a joke, but just partly as a joke, to suggest that maybe GFI could next step do sort of study on free capital flows, free finance-based flows as the most damaging problem for democracy and social justice worldwide. Thank you. Thank you. So I can sit here. You can. I think. Well, good afternoon, everyone, and thank you so much for the invitation. Diana, thank you for the kind words. And it's a pleasure to be here again. And of course, thank you, Leonardo, for giving me the start from what I should be talking about. I was, last year, I was also kindly invited. And I read, I went through the report on Brazil again that you have reproduced here with the numbers that are still, for me, extremely shocking. So let me start from what I stopped in Brazil very quickly. The two points that I make broadly then was that, first of all, if you look at the numbers, I thought that the methodology and so on was excellent. I looked at the numbers. I was astonished. I thought that something over 1.5% of GDP and incumulative terms in terms of illicit financial flows had to be wrong. And that 21.7 billion dollars as the average for earning in a period of 10 years, if I remember well, I was looking at that, it could all only be an overestimated. Of course, I was completely wrong, completely wrong on that. I have been wrong on many things in the last one year or so. But this one here, I have to say, I apologize, I was totally wrong. Okay? But let me, the second point that I made there is that, of course, both as an economist and a citizen, I saw that I took very seriously the issue of illicit financial flows. But as I look at the Brazilian cases specifically that we were discussing in Rio, I saw the way that things had been addressed in terms of illicit capital flows. But also on general government issues as a phase, as a part of the process of institutional building that Brazil has gone through in the past 30 years since its re-democratization. Just for those who are not very familiar, we had a dictatorship for 25 years, very dark moment of our lives, but also a moment of very bad governance that had consequences that lasted for at least 20 years. So for us, the end of 90s was the rebuilding of a few steps towards the institutionals required for a full democracy and a full market economy. First of all, we had the first phase in the process of rebuilding was the creation, the recreation of citizens' rights, which was in the constitution of 1988. What rights constitutes the rights of citizens? Second phase was the creation of a microeconomic management system that allowed for stability after so many years of instability. The first, the third phase had to do with addressing the issue of inequality and poverty. It's not just as a government policy, but as a national policy, as I would say, as state policy. It's when the nation comes to view the issue of inequality and poverty as a central issue of the society that we have to address. So those are phases of the institutions. And then I said in Rio that I always thought that the fourth stage would have to be addressing the governance issues that have been building throughout many years in our society and that had created what now we call endemic problems of governance. It's not just endemic corruption, it's endemic problems of governance, of how you deal with citizens' rights and obligations, the relation between the state and citizenship and so on. So I think that what I can say now, one year after that, and I only have six minutes to make the case is this. Throughout this process, we have created several ways of addressing the issue of governance. One of which has become very well addressed by the press, which is the mechanisms to the police within the judicial systems that was great to pursue and to punish corruption. And that's where you start the whole process of analyzing corruption and the scandals that we talk about. It's unprecedented in Brazil, and I would say it's unprecedented in many developing countries the degree and the depth of the investigation that has been done thus far. And if you remember what I said, one of the interesting things that the whole process and the whole discussion of the endemic corruption in Brazil started with illicit capital outflows. It was found out that there was some movements that that was traced using the database from the central bank and also the tax authorities that there were a specific individual that was sending too much money abroad, and that was traced into the public companies. And from then on, you start open up by a process called the witness protection systems that you have in the United States, but in Brazil it's called the La São Primeada. You start a process of open up and looking deeper into the several pockets of corruption. Now, it's interesting that it started with illicit capital, an investigation of illicit capital outflows, because in my point of view, and this is the fourth point that I want to say, is that in my point of view, the illicit capital outflows and inflows have to do with facilitate endemic corruption in developing countries and in developed countries. And therefore, it's not unusual that you start looking at government issues inside a country by first spotting the issue of illicit capital outflows. I'm quite sure that all those countries that you look here, those four or five countries, if you start tracing the illicit capital inflows into the issues of endemic governance problems, you're going to find a lot to discuss in society. Now, as an economist, we know, for instance, that the consequences of illicit capital flows when it comes, for instance, to making balance of payment constraints is even tighter. Of course, let me just make a point. If we had $500 billion as international reserves in our account, definitely we would have much better way to shelter the international economic crisis that we're facing now in most developing countries. I'm facing those countries that cannot issue a hard currency. The deterioration of the tax base, certainly, it would be possible, the government would be much more prepared to address all those issues related to, for instance, social and economic exclusion if they had a tax base that allowed for an expenditure, for increasing expenditure, particularly social expenditure. But this is the economist's point of view, of course, which has social impact. But for me, what has become very clear in the past years is that by being a conduit through which you facilitate endemic domestic corruption, you create huge problems to long-term development. Just giving an example, when you look at infrastructure investment, I was just coming from Brookings, and I think it's an overall view nowadays that one of the main constraints to development in nowadays emerging and also developed economies has to do with the infrastructure gaps. Infrastructure investment gaps lead to low productivity, low competitiveness, and low social and economic development in general, human development as well. Don't forget that infrastructure has also to do with basic public goods such as access to good water, access to appropriate sewage, access to schools, name it. It has infrastructure, and name it. There is a gap when it comes to that in developing countries. If you only look at that sector that is so fundamental for development, and if you look at the case of Brazil, you understand what we have missed in terms of development by allowing endemic corruption, not only to lower the levels of infrastructure investment, but also to postpone and provide population with what I would call, just to be generous, a sub-automobile infrastructure basis. It has created, it has affected the long-term social development of the nation, but also its capacity as an economy to create the jobs, to produce, to export, and to make its own development sustainable. So having said that, I only have 20 seconds. I want to thank you again. I want to thank you for inviting me for the last time and inviting me this time, even though I was so wrong. And I want to thank you for bringing forth this important discussion. And I would like to ask you to help us even further by deepening your analysis of the relation between listed capital flows, domestic corruption, and development. With that, I think you would close that gap and make a significant contribution to understand the problems, particularly for Brazilians to understand the challenge that we have. Thank you so much. Thank you, everybody. Before I open for questions, I'll take the opportunity to raise some issues here with Leonardo that was quite provocative with the idea that, in fact, we have not to promote the liberalization of the capital industry. So how do you see, in fact, because what we have seen in the last years, in fact, a movement to liberalize the financial market, to have more transparency integration. And at the end, what you're saying that it brings more problem to the social justice and all that we are seeking for development. So we should be moving on the opposite direction. So you're quite provocative on what you're saying. What you suggest or because it's difficult to see to step back in this issue. So what we should be doing in terms of working with all this movement of liberalization and how we would deal with this. I think we should go back, in a way, not in the sense of nostalgia and going back to Bretton Woods. But we should recognize that financial globalization went too far. Especially because of those problems that we are highlighting here. So it has to be reversed to some extent. And how do we do that? Well, managing capital flows is obviously, and it should be one of the key tools of macroeconomic or macro financial instruments or policies in a globalized era. It's crazy that we have global financial markets, but we don't have global financial instruments to deal with those markets. So the markets, they go crazy. And the assumption is that they will self-correct. Boy, the crisis showed that's just the reverse. And theory also shows, not mainstream theory. But if you come from Keynes and you go through Minsky and to all the sort of macro financial type of looking at how the economic system works, you will see, first of all, finance is really the heart of the system. If the financial system, oh, and the crisis again showed that. If the financial system goes down, everything else goes down. So even Mr. Bush recognized this when Bernanke said, if we don't have that money, we might not have a financial system next week in this country here. That became a famous phrase, right? So I think, yes, we have to go back and reinstate some sort of capital controls. Is this crazy? No, I don't think so. Look at China. China still has capital controls. Brazil still has some, dismounted a lot. But it could be done. The problem is that I would agree with you that the sort of the ideology and the sort of the whole outlook is not pointing very much to that direction. To my perspective, perplexity, because all that we witnessed in the last seven years, five years since the crisis, should be pointing in the other direction. So just to close, do I think that financial globalization went too far? Yes. Do I think that we should reverse it to a certain extent? Yes. The tools, I think we have some of the tools. And it's just to make them work. Problem is, political problem in terms of lobbying. Financial industry is extremely powerful here and there. But, yes. Yes, you're right. You've been moving too slowly on after the financial crisis. Yeah, because transparency is good. But don't confuse more transparency with more freedom, freedom of capital movements. It's completely different things. Thank you, Leonardo. Dev, do you want to mention this issue? Or can I go and make a question to Rogério? And then I open. Can I? OK. Rogério mentioned that we should be looking at illicit financial flows behind the corruption process in the countries. This is the main issue when dealing with illicit flows, that you should be tracking it to fight the corruption inside the countries. But when we look at the last panel on Russia, that we're talking about illicit flows, corruption, and how people on the high level positions in the country, how we would have some results on tracking these illicit flows in real terms. So how we are going to tackle this issue. We cannot find illicit flows, but in terms of real results in countries like Russia or China, when we don't have a very democratic political system. So we are going to have a no end or no result. So talking about Brazil is a different case. I think you're right. We're going to talk about trying to identify the illicit flows and going back to connect it to corruption scams. That's what happened in the Petrobras scam. So it's how everything began. But it's a different country. You have already more strong institutions and the judiciary working there well, I would say. So the main reason behind we should be tackling illicit flows. Thank you, Adriana. I think you have important points there. But let me clarify one thing. What I said is that illicit capital flows is a conduit, not necessarily the main reason, the main source of illicit capital flows are the corruptions that, for instance, we're observing being investigated and punished in Brazil. You have all kinds of corruptions, corporate corruption going on that is associated with that. And you showed that in your numbers. I think it is just a conduit which is mostly facilitated by regulations in developed countries. I think this is something that developed countries would do a great favor to developing countries, particularly those who have less institutional capabilities in enhancing their regulations and dealing with the problem from here for two reasons. First one I have already mentioned is the difference of institutional capabilities. When you talk about Brazil, we're talking about a country with a lot of institutional capability. But most, I believe, it's an inductor, but most developing countries have very small capabilities to deal with the issues, particularly when the international financial architecture is so conducive to allowing illicit capital flows. So by enhancing in developed countries, particularly those, this is the second reason, those with very important, very deep financial markets, such as the United States, United Kingdom, but also Singapore and so on, enhancing the regulations and the monitoring of capital flows that would make life much easier for developing countries. Now it's interesting that Leonardo mentioned China, which is in his right. And China still has controls over capital flows. But China is an exception when it comes to, it's a very big exception. It's the second largest world economy, but is an exception because it is a market economy with a very strong political system, just to put it in a political correct way. And therefore, the capacity to introduce that kind of regulation from within and maintain control is not comparable with any democratic market economy. Which is not a technical problem is what you're saying. It's a technical problem because in democracies, you have to deal, for instance, with different interests of different parts of society and the way that you address political forces. For instance, the financial sector is very strong. So it's very unlikely that in a democratic market economy, in a developing country, sorry, I said that, you have the capacity to influence from within the regulations required to introduce all the capital controls that are required nowadays. I don't know if I make myself clear. In Brazil, for instance, of course, you can always talk about financial sector using its powers, knowledge, it made us all. But this is part of the game in democratic economies. I mean, a government can do so much, even if the government had all the intentions. If the technocrats woke up in the morning and said, OK, let's do capital controls. First of all, the financial sector has a lot of political power from within. And the second thing, it has an incredible capacity to innovate, particularly if it's linked to their peers in developing countries that have very deep capital markets and very rich capital markets that are permissive to the innovations that allow you to go around the regulations that exist in developing countries. The Brazilian central bank, for instance, and it's all the regulatory framework is very strong. But the institutional capability, even of the eighth economy of the world like Brazil, is small in relation to the capacity to innovate of those in the financial market. It's a lot of money poured into very extremely powerful brains and to deal with that. You can find, if you want to know why I have to pay my taxes in the United States at a level, I won't review it here because they don't even know, but it's very high. And a former Republican candidate, he only paid around 12%, you understand? Because he can't hire the best brains in when it comes to accounting. So the financial sector in developing countries can also hire the best brain in terms of finding ways around. And they are capable to connect to international financial market that is also very permissive to elicit capital flows. So I think it takes more, it's more the responsibility of developing countries to do that than that of developing countries. Not that a country like Brazil should not be a part of that because Brazil is not just a developing country, it's the eighth economy of the planet. Or it's a G20 member. But remember, I mean, if we have that problem in Brazil with all the institutional capabilities that we have, imagine in other countries, I'm not going to mention any, that is much smaller, much less institutional capability, and it can be very easily dragged by, overwhelmed by the capabilities of financial players. Thank you. Sorry, I took you long. Just want to make a couple of general observations. This model that I'm using for all the case studies is basically an outgrowth of my doctoral dissertation back in 1982 on Brazil, which I used successfully to get that not only degree, but also do a working paper in the IMF at a time when the IMF was engaged in a program with Brazil. So it was very sensitive, but still they approved it and the working paper was published. But the larger point I want to make is that based on the background research on Brazil that I had to do all over again to bring myself up to date, I decided that there is a case for studying both capital flight and illicit flows. So I agreed totally with Leonardo that in some countries we have to study both because capital flight becomes a very serious issue. There's nothing decent about capital flight. There's nothing decent about illicit money coming out of the country. It's very, very harmful. It's just as harmful as illicit flows. So we have to make, I have to make that call because although GFI, we are focused on illicit flows, but I have to make the call that if I only focus on illicit flows, I might miss out some important things about that country. And Brazil is a case in point. I mean, people were concerned about capital flight. The president was making statements about capital flight and including the IMF executive director was making statements about capital flight from Brazil. So I had to tackle it. But the point here is that the illicit flows are linked to the underground economy whereas capital flight is linked to more the macroeconomic drivers. So that's the distinction I would like to make. But I did study both phenomena, by the way. Thank you. Can I just jump in for a minute because Adriana, you asked me about, OK, what can we do? What can we do? Well, a couple of things we could do. For example, fiscal shelters. Why corporations, US, UK, European, all corporations, why private corporations are able, is legit for them to register on fiscal shelters? Why that's the case? Why what's the added value that they bring by doing this? So could we do something about this? Obviously we could. Technically speaking, obviously we could. Also, debt. That should be a problem of the debtor and the creditor. That's Keynes in his plans for reconstructing Brett Moods. It's not a new idea. Both parties are part of the problem, and they should be held responsible. If we get into this seriously, we would have a different way of handling imbalances in the world economy. Number three, is there any serious study showing that financial globalization really helped boost growth? No, there isn't. So I think we have some good things to rely on. And just to finish up, Jorge, you mentioned, OK, in democratic countries, it's more difficult. But then you said something interesting. You said, for example, the power of the financial industry, the power of this industry, or the food and drug, or whatever. If this is the case, I would have to ask a much more complicated question, which is, has democracy became this kind of democracy that is not we the people, is we the corporations? Is this a sort of democracy that became sort of dysfunctional for handling global macro-financial issues? It's not a sweet question to ask, but I think it's fair to ask the question. Well, I want to say something. I cannot miss that, but the market has always been dysfunctional, but it's still the best system out there. And what it takes is to create the check and balance is necessary for that. What I was trying to say is that to do that in developing countries is much more difficult than in developed countries for two reasons. Institution capability, three reasons, I'd say. Institutional capability is a law. Power, given the relation between financial players inside and outside, power to stop financial players is also lower. And the third thing, because it's much perversive, it's the international financial architecture allows for all the ways to promote illicit capital outflows. That's the only point that I was trying to make. To my reading, Leonardo, financial liberalization was, as much as anything else, a formula on the part of Western financial institutions to promote and receive flight capital out of your countries into our countries. That was the real underlying motive of it. We agree on that. Now, you have suggested that there are steps that can be taken beyond transparency in the direction of capital controls. You've suggested getting rid of financial havens, tax havens, for example. We would, frankly, interpret that as a position within our transparency agenda. What I'm trying to do is to see if there's commonality or not commonality between what we pursue, which is transparency on the one hand, versus what you're suggesting, which is greater capital controls on the other hand. Is this blurred between the two approaches? GFI is very focused on being pragmatic in its recommendations, in being practical as to what can be achieved. So I'm groping for curtailment on capital liberalization that is anywhere beyond the transparency measures that we're already dealing with. Are there other measures that you would suggest? I think this issue of getting into the relationship in between corporations and fiscal shelters, it's not only transparency. But to say, look, corporations should not be able to do it, why they are able to do it. So I think it's something that should be taken much more seriously, but I obviously recognize that much more international cooperation would be needed. And again, it becomes, after all, a political problem. So yeah, and then it goes sort of a challenge for GFI. Obviously, to be pragmatic is good, but don't get too pragmatic, because then you sort of, you cease to be bold, and you don't go beyond what you should be, like you should always be targeting much more than what you would like to happen. And just to finish up, the other thing in the financial system, which is quite weird, why are corporations also able to set up special investment vehicles where they move their stuff off and it becomes off-balance sheet? Why? Why on earth? Who gains with that? It's something that legislation could correct. Why it doesn't? So can we be doing, could we be doing more? Obviously. Is a political problem? Obviously. That's why I think we have to rethink the way the political system is structured. If it impedes those reforms, we have a problem. Yeah, I want to thank the panel for a terrific presentation. My question is, back in the 90s, many of us had both, I'm sure, inside and outside Brazil had high hopes for the Workers' Party, broad-based democratic movement, modern. My question is, what went wrong? What went wrong in the sense that is it just possible that under the current international financial architecture that the pressure of big money, the pressure of international finance, the facility with moving these large sums of money back and forth, does that make corruption almost inevitable, even for a party like the Workers' Party? Yes. I would say yes, precisely. It makes almost inevitable, yeah. I think that we have to look at the sentence. In what you have to look at the recent scandal in the historical perspective, what you have now is a much bigger capacity to investigate than you had in the past, which does not excuse the government in power for the wrong doings that have been done throughout these years. But you also have to understand that the political system in Brazil was created under the assumption of capturing support. It has been that for a long period of time with the renormalization, we did not address the issue that has been created several informal and informal ways to maintain political cohesion and to allow governments to function. So that's what I was talking about when I said the problem of corruption is endemic, because it's both between within the state, the government system, the relation between the state and the corporate sector, and between the state and citizenship. You have created a system that has to be a government problem that has got to be addressed. And what you see now, even though you're talking about the workers party, but what you see now, I think, is the most intensive part of a process of dealing with endemic corruption that has existed in Brazilian politics and corporations for a long period of time. I'm not saying that that's an excuse for a party that came to power exactly claiming that would address that systemic problem. And I can say that with a strong voice, I am one of the founders of the workers party. At the age of 16, I joined the workers party, and therefore I was one of the founders. And I feel myself that the workers party has failed simply because if there was a problem of governance that was associated with endemic corruption, it should be addressed by the workers party, because that was one of the main proposals and the difference in relations to politics as usual. Let me just add something. I would agree with both. But what we saw is the first time the PT arriving at the government and not wanting to get rid of it. And at the end, I think it found out that the only way to maintaining power was to keep with the scam. What happened, I think, went too far. And things like, well, let's put it in a high other standard. So the kind of corruption, in fact, is bigger than it used to be, at least as far as we know. So they are checking it out. So it's very sad to have the work party in power and not being able to follow and to get what they promise, to get rid of corruption, at least to combat corruption. In fact, they went inside the corrupted system to survive in power. So it's a very difficult decision, I think, they had. So when you have all the scam ready to work, what they did was to improve it. And having the pre-salt and all these opportunities at that time with the growth rates in Brazil and all the international system working in a beneficial way. So how not to use the system? Sorry, I became a little bit passionate for all these reasons. I want to say something about what Leonardo and Raymond were talking about. I think you say the same thing this year. I mean, if there's nothing wrong about a company open up, establish itself in another country. But when it comes to tax havens, because of the fact that it's opaque, that you can do cross operations within, and there's so little accountability, it is possible for you to use that as a means of evading taxes, of doing all kinds of illicit things. If increased transparency, that would disappear immediately. I've been addressed that issue in the World Bank many times, because the G20 member of Brazil was also in favor of the, oh my gosh, I forgot the foreign. What's the name of the foreign? To increase this transparency, I'm dealing with tax havens. But anyways, I can remember that. And I also represented Panama, by the way. But the problem is that when you're trying to increase transparency, and you're trying to address the issue, you do in asymmetric ways. What I'm saying is that some tax havens are saying, OK, we have this list, Panama is in it. But we don't want you to look at other ones, and therefore it becomes a very unbalanced discussion. What you have to do, and I think that would solve the problem there, Leonardo as we mentioned, and Raymond as I mentioned, is transparency in all this offshore banking sectors. And I believe that by doing that, many of those would just disappear immediately, because they were created particularly to be opaque, not only in developing countries, but particularly in some developed countries, unfortunately, I have to say. Is this on? Diane Francis, I'm a journalist from Canada. First, a comment, and secondly, a question. I think that Brazil has to take credit for the fact that in my experience of covering all this stuff, it's probably the first Latin American country where a major scandal was generated out of the efforts of its institutions, and not by the press. Feather in your cap. Very important to recognize that. Mexico's scandals, just the reporter gets fired from her TV station. The other question is, those of us who are concerned about this kind of thing in the developed world do realize that we're not doing anywhere near enough. For instance, the Canadian banks, the British banks dominate the Caribbean where all the dirty money is hidden. That never seems to change. Nobody gets upset about it. We have major money laundering, facilitations, helping the Chinese buy condos in Toronto, Vancouver, and so on. What would you, if you had to pick three things that would sanction behaviors by the developed world, what would they be in order of priority and importance? What should the developed world, how should they be punished, and how should they be restricted? No, that's a really tough question because it will be sort of self-inflicted by, it will have to be self-inflicted by the developed world. The governance system will have to change completely to do that. So I think the measures that we were just mentioning here would ameliorate that, would get it to a much lower degree. I think it would be like, a utopian thing to think that we would be able to erase that. And just on a note on Rogerio, I think I obviously agree that more transparency would help a lot of this, but I would add more transparency plus new legislation, not only transparency, new laws. Just transparency, yeah. As the ones I mentioned, corporations cannot register in fiscal shelters. Why do they have to do it, for example? Or they cannot establish special investment vehicles so that they would move a lot of their operations in a way that they would appear as off-balance sheet, or to limit, vastly limit leverage and to look in terms of how leverage is being used to. Or nowadays, it's possible, and the Brazilian central bank does it. It's possible because of the electronic infrastructure. You can look at banks' balance sheets on a daily basis because everything can be crossed. If it's not, it's not a technical problem. It's, again, a political one because you can look, especially if the banks are big, if you have a system with 3,000 banks, it's difficult. If you have a system that's dominated by 10 or 12 or 15 banks, you can look at their balance sheets daily and you can spot anomalies. All this is doable, technically. Politically, it's a completely different story. I, let me say something about, it's good that you're from Canada because it makes a point that I was trying to address previously. Canadians are clearly critical about tax havens. But when it comes to the government itself, it finds it very difficult to not to support, for instance, operations of Canadian banks and the Caribbean. Now, it's not because I don't believe that, of course I am not saying that there's no corruption whatsoever in Canada, but certainly the institutions are very strong. I don't believe that anybody has to pay a government to defend the tax havens with Canadian banks because it's an important part of the economy. That's when, in democracy, it becomes so difficult for you to say, okay, I'm going to stop you from having an operation in the country where the regulations are more permissive for you to do all kinds of opaque operations. What I'm trying to say is that if you could establish internationally stronger transparency standards and you could have independent boards to follow up on that and to say, well, it's not the Canadian government, the Brazilian government and so on, but we are independent and we have authority to say certain constituencies are not transparent enough to have operations of any international bank, then things would be facilitated in terms of ranking and a clear monitoring system. I find it very difficult in democratic societies for you to convince that an important sector, you're not going to defend an important sector of your country, and the financial sector is an important sector of most of countries. I mean, think about it, I mean, for instance, in the UK and I strongly believe in the UK as a democracy, the financial sector is one of the most dynamic industries. Are you going to convince any government left and right that you're not going to defend tax havens promoted by British banks in the Caribbean if they say, well, this is so important for the most dynamic sector of our economy. I think that the best way for you to address that is to say, okay, we're going to allow you to do that, but in a transparent way. Show us the operations and show us that you're following some criteria that would stop illicit kind of operations. And by doing that, you're going to see the next thing that tax havens are going to start disappearing. One more question here. Because I have to leave. You're sorry. Okay, just a second. Leonardo's going to leave any time soon, so if he's not here to answer, if he's going to add something or less. I was just remembering an occasion that must have been at least 20 years ago where I was reporting on agricultural commodities and there's a privately held, very large. The question is for me. No, I thought you were about to leave, so. Yes, yes. Okay, so. Okay, thank you. Do you want to say something? I was going to say that you're completely wrong, but I'll explain to you they're not here yet. Yeah, absolutely. Don't stay, don't stay. Any final words? I can't remember if it was Brazil or Argentina, but there was, Cargill was. Thank you. Thank you. Bye. Thank you. Thank you very much. Cargill was an American company. It's American company. It's privately held. And so it has virtually no transparency. It bought wheat. I think, I can't remember if it was Argentina or Brazil, probably Argentina, but it bought the wheat in bulk, shipped it to the United States, milled it in Cargill factories in New Orleans, and then sold the wheat to Egypt under a US federally subsidized program, which was called the Food for Peace Program, which was established after World War II to support US allies and democracies and make sure there was not food. So basically they were using US tax dollars to support this sale. And there was absolutely nothing illegal about it because nobody had ever imagined it'd be cheaper to bring in wheat from outside the United States than to ship it down the Mississippi. But I proved it through shipping records basically. And when I called and asked them for a comment, they were very rude about it. A week later after the story went out and the congressional investigations got started and wheat farmers were picketing the grain, Cargill grain elevators all over the country, suddenly Cargill's CEO and chairman's apologize within a week, apologize publicly to the wheat farmers of America for this unfortunate oversight that some low level trader had overstepped his bounce, which is of course not what they said a week ago. But that is how fast it's possible for a fairly simple amount of light. Publicity can change a discussion. And this Cargill is not a company that answers to anybody except it's own internal board. It's not publicly traded at all. So I just was going to say that although transparency seems you don't want it to be the end all and be all of everything, it still seems to be one of the biggest levers you can use to push. But at the same time I'm concerned and wondering what you think about situations where the transparency is also running into things like in Brazil where there's still such an unease based on past history in trusting that the money is safe or the family, that people had family money stashed outside the country in case they'd have to leave in a big hurry. I mean, how much of this is rebuilding trust in the country and its institutions? Well, first of all, what's your name again, I'm sorry? I'm Terry Sprackland, I'm an international reporter with tax analysts. I could not hear your name. Terry? Terry, I love your story because it says something once you have transparency. And you have free press and free public opinion. Even if that what happened was legal, you would say, okay, this is not right. If it's not right and it's taking money from out tax money, we should change the law. That's why I think transparency and democracy comes even before the change of regulation. How can you decide how you're going to change the regulation if you don't have the information? And even if you don't know what is right or wrong and how the citizenship wants to change regulation, okay? I love that story because it makes the point that Raymond and Leonardo was saying as the same thing, but with different sequencing and the need for institutions for that sequence to happen. So I agree with you, transparency first, then evaluate what is illegal or legal, and when it's legal and you don't like when it's not right, change the law, okay? That's the sequencing. Yeah, it's reminded on licit or illicit flows as well. So morality maybe it's changing different countries and sometimes being legal is not enough so if it's immoral. This is the second part that I love of the story and I say this idea beautifully because you're touching the issue of Brazil. Now, when you have for so long problems of governance, corruption becomes business as usual. People start accepting corruption at different levels. So what is it wrong if I, for instance, if I sell my apartment in Brazil and I sell it for a lower price because I want to avoid taxes and why not have somebody to deposit my money in Miami? Now, I can give you a number of examples that I heard people saying that and I was like, because this is all wrong. This is all wrong, the whole structure is wrong but people start accepting that as business as usual. The same thing as people accepted until very recently that someone working in your house in Brazil as a domestic servant could leave it as a slave and make as much money as a slave would have and be there, and that's a longer story, be there for you at six o'clock in the morning to make your coffee and leave the house or when they leave the house at 11 o'clock at nine just to prepare your meal. People thought 20 years ago people thought that it was normal. People also thought in Brazil it was normal to have a sign in the elevator saying the servants please use the service elevator. And it was discriminating because most 99% of the servants well first of all this is socially unacceptable. The second thing is 99% of the servants were black. So that's the kind of society that Brazil was 20 years ago has changed completely in 20 years. Now coming back to the present what we have is a shock treatment of what should be accepted or not as life as usual, business as usual. It goes into the relations between the government as coalition, the relation between the state and citizens, the relation between the state and governance, the relation between civil society and all other parts. What we're having is a very intensive course in looking at ourselves and saying what is illicit and what is not illicit in a democratic modern economy. And because we had to do it in such a short period of time and you said it because the institutions that were created allow for that to happen. It has become so traumatic. You have people going to jail, you have the society astonished, you have a government falling apart, but at the same time you have a very, very rich moment when the nation is looking at itself and saying we have done business for 500 years we should not be doing this way. And I think this is what gives me hope for this process. It's traumatic but there you go. Yeah. Well, thank you, Rosario. I'm going to close the panel. I think you have got to the end, no time left. Thank you again for you for staying here and I expect what's coming for GFI Future in terms of the new studies and what you're going to tackle as we have raised a lot of information from different countries. So good luck and hope to see you again in another opportunity. Thank you. Thank you.